What is financial aid?

Financial aid is money in the form of grants, scholarships, work-study, loans, education tax credits, or a benefit from completing community or military service. Financial aid exists to help students and their families pay for education after high school.

Grants and scholarships don’t have to be paid back. They are considered a gift and are called gift aid. Work-study is money that you earn by working at a part-time job while you are in school. A loan is money that you borrow that must be paid back, usually after you leave school. Work-study and loans are sometimes called self-help aid.

Education tax credits, like the Hope Scholarship Tax Credit and the Lifetime Learning Tax Credit, are available to individuals and families who file a tax return and owe taxes. Tax credits are subtracted from the tax an individual or family owes, rather than reducing taxable income like a tax deduction. To learn more about education tax credits, visit the Department of Education’s web site by clicking here or ask your tax advisor.